This article is taken from an exclusive WIRED series, '41 Lessons from Uber's Success', featuring Tim Harford, Rachel Botsman, Nir Eyal, Clayton M Christensen, Josh Elman, Carlo Ratti and Richard Branson. You can find the other articles here.
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Uber's success is built on changing consumer habits. In the past, modifying consumer behaviour meant advertising. Today, companies can change behaviour through experiences. Companies such as Facebook, Twitter, Instagram and Uber have generated billions of dollars of value, but barely spent anything on mainstream advertising. Uber is the kind of product that you use once, you use twice, then the third time you're probably not going back to using a conventional taxi.
With all sorts of habit-forming products, there are four stages to the hook: trigger; action; variable reward; and investment. Uber's on-demand car service offers the psychological ease that comes from knowing that your car is on the way -- you can see it coming via the app. It's something that a particular demographic really wanted, and these consumers were willing to put up with some of the glitches of the early iterations of the product while the company figured out how to make it something the mainstream could use.
Habit-forming products increase the reward -- they're either trying to add variability to make the experience more fun and entertaining, or they're trying to minimise variability to give the user greater agency and control. Uber's hook is taking something that's inherently variable and then decreasing the variability to increase the user's sense of agency and control. Finally, there's the strategic use of free samples -- the investment phase. When you go through the experience for the first time, even though Uber is giving the ride for free or at a discount, you still have to enter your credit card. That's an example of the investment phase -- putting something of value into the service. So, next time you need a ride, you've already entered your credit card information and you're ready to go. Which makes it just that bit easier to fire your old habit and start a new one.
This article was originally published by WIRED UK
